Homeownership tax breaks to take in December
Wednesday, December 18, 2013
Is there any popular holiday tune more beloved than The Christmas Song?
Its title alone -- THE Christmas Song, not just A Christmas Song or Some Christmas Song -- gives it predominance in the Christmas carol collection.
And the prominence is well deserved, especially Nat King Cole's rendition of Mel Torme's classic. It is simply superb.
Cole's inimitable voice makes this the quintessential Christmas at home song. We've got a roaring fireplace (mmm, toasty chestnuts!), mom and dad snuggling (remember the mistletoe mention) and the kiddos finally settled in for the night awaiting St. Nick and his flying reindeer.
All these home and hearth musical images naturally got my tax mind wandering to homeownership tax breaks. And that earned The Christmas Song, with all the homey images it conjures, spot number seven on the 2013 Christmas Tax Tip Tunes playlist.
Homeownership's many tax benefits: Owning a residence is a major accomplishment for many folks. It's also a major expense. But the tax code offers home owners some help in covering those costs.
The obvious tax help is the deduction of mortgage interest and property tax payments.
Interest paid on many home equity loans or lines of credit also is deductible.
If you paid points for your home loan, or even points in connection with a mortgage refinancing, you can deduct those, too.
Some homeowners can even deduct the private mortgage insurance, or PMI, they pay on their house loans.
Improvements you make to your home can increase its basis, that it, its value, and that will help reduce your sale profit for tax paying purposes. Or in some cases, might qualify as immediate deductions if they're made for legitimate medical reasons.
December homeowner tax focus: When the end of the year rolls around, home owners should pay special attention to two of their residential tax breaks, the mortgage interest and property tax deductions.
If you pay these amounts by Dec. 31, you can deduct them as itemized expenses on the Schedule A you file with your coming Form 1040.
Take care, though, that you won't face the alternative minimum tax. This parallel tax system, known as the AMT, was devised in 1969 to guarantee that wealthy filers paid their fair share to the IRS. Under the AMT, some usually acceptable tax breaks aren't allowed.
You can still write off your mortgage interest, but real estate and personal property taxes aren't deductible under the AMT. So run the numbers.
If you won't face the AMT and paying these two home-related items will cut your coming tax bill, then write the checks by Dec. 31.
You also might find these items of interest:
Such a lovely song! You are absolutely right that owning a residence is a major accomplishment for many folks and a major expense. When the end of the year rolls around we should pay our mortgage payments in the first place and only then buy presents for family, home decorations and so on. One extra payment per year over the duration of your mortgage lifespan will reduce your mortgage amortization by years, which means you will pay less interest in the long run. Of course everything depends on how many years you need to pay and the percentage of your mortgage. This year my husband decided to make me a Christmas present beforehand and to buy our first nest, our first family house. I know, we saved for so long to buy it, but when you finally buy it and enter your own house, it’s an incredible feeling! He found it with his friend at localmartca.com as then he explained to me. I’m so happy to have such a present for Christmas!
Posted by: Pilar | Tuesday, December 24, 2013 at 06:19 AM